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Gold prices edged higher to a more than five-month peak on Wednesday as a softer dollar supported the bullion while investors awaited cues on the rate hike trajectory of the US central bank from its two-day policy meeting.

Spot gold was up 0.1 per cent at $1,250.20 per ounce, as of 0405 GMT, after hitting its highest since July 11 at $1,251.06 earlier in the session.

US gold futures were up 0.1 per cent at $1,254.60 per ounce.

"The market is largely in a holding pattern as everyone is focusing on the FOMC (Federal Open Market Committee) meeting... We see prices largely range-bound," said Benjamin Lu, a commodities analyst with Phillip Futures in Singapore.

"The market has priced in the fourth hike but what remains important is the foreguidance for 2019."

The Federal Reserve is widely expected to raise interest rates for the fourth time this year, but weak stock markets and slowing global growth may prompt it to tone down its stance on monetary tightening.

If it sounds dovish, prices should consolidate and hold at $1,256 and if it breaks that we might see prices going much further to $1,265, Lu added.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, in which it is priced.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.3 per cent, having hit a one-week low in the previous session.

Meanwhile, Asian share markets played second fiddle to bonds as a sharp fall in crude oil prices fanned speculation the Fed might be done with tightening after its policy meeting later in the day.

"Gold continues to put in an active session as traders remain strong buyers on dips," Stephen Innes, APAC trading head at OANDA in Singapore, said in a note.